Suppose governmental expenses are rising rapidly. Which strategy could the federal government use to solve this situation?(1 point)

Question

Responses

Increase corporate and individual income tax rates to raise revenue, and then eliminate payments to state and local governments to cut other costs in the federal government.
Increase corporate and individual income tax rates to raise revenue, and then eliminate payments to state and local governments to cut other costs in the federal government.

Make cuts to defense and education spending, and then increase tax rates to reduce the effect of increasing expenses in the federal government.
Make cuts to defense and education spending, and then increase tax rates to reduce the effect of increasing expenses in the federal government.

Delay payments for the interest on the national debt and increase tax rates for payroll and corporate income taxes to raise funds for Medicare and Medicaid.
Delay payments for the interest on the national debt and increase tax rates for payroll and corporate income taxes to raise funds for Medicare and Medicaid.

Increase payouts for entitlements and decrease income and payroll taxes so that consumers are provided with more money to pay for increased medical costs.

Answer 1

Among the options provided, the most effective strategy for addressing rapidly rising governmental expenses would be:

Make cuts to defense and education spending, and then increase tax rates to reduce the effect of increasing expenses in the federal government.

This approach balances both reducing expenditures in certain areas of the budget and increasing revenue through tax rates, which can help stabilize the federal government’s financial situation in the face of rising expenses. It addresses the situation from both a spending and revenue generation perspective.